The Board of Administrators of Safilo Group S.P.A. Approves 2023 RESULTS1

Padua, March 14 2024 – The Board of Administrators of Safilo Group S.p.A. has right this moment authorized the Firm’s consolidated monetary statements for the 12 months ended December 31, 20231 and examined the separate monetary statements for the 12 months ended December 31, 20231, which will likely be submitted for approval by the shareholders on the Annual Basic Assembly to be held in a single name on April 24, 2024. The Board of Administrators has determined to not suggest the cost of a dividend on the subsequent Annual Basic Assembly.

Angelo Trocchia, Safilo Chief Government Officer, commented:
“In a fancy 12 months like 2023, through which a tense and unstable geopolitical and macroeconomic surroundings added to our direct challenges, it was significantly necessary for us to attain a stage of income very near the robust efficiency recorded in 2022, when development, in comparison with pre-pandemic 2019, was +12%. North America continued to be affected by the prudent perspective of the principle eyewear distribution channels and by an unfavourable solar season, whereas in Europe the unimaginable job of our groups allowed us to successfully offset the decline of the enterprise within the former GrandVision chains, additional demonstrating the resilience of our Group and the worth of a technique that sees our prospects as the main focus of all the firm.

In 2023, we needed to take one other take a look at our industrial footprint in gentle of a model portfolio that was now not aligned with the know-how current within the historic Longarone plant. The venture was complicated, however we managed to achieve the situations for the absolute best end result, with the disposal of the plant and the total employment of all the employees, additionally permitting for the preservation of the sector’s current know-how.

Within the 12 months, we obtained the early renewal of our core licenses, from Kate Spade and Tommy Hilfiger to BOSS and HUGO in January 2024, and different necessary partnerships. We additionally signed two new agreements, with Etro and Stuart Weitzman, including to what’s right this moment a wealthy and complementary license portfolio, with unprecedented visibility, of round 6 years. This was an important achievement for us, which sits alongside the stable and long-lasting development of our residence manufacturers, an virtually distinctive portfolio within the trade, which, in 2023, at roughly 44% of our gross sales, progressed on our goal of representing over 50% by 2027.

From an financial standpoint, our efficiency was characterised by the numerous enchancment of the adjusted gross margin, near the Group’s historic highs, which we determined to reinvest in these tasks instrumental to the expansion of the corporate in the long run. However the inflationary pressures and an unfavourable working leverage, we progressed with the investments envisaged in our marketing strategy, closing the 12 months with an adjusted EBITDA margin not removed from the 2022 stage, one of the best within the final seven years. The adjusted internet revenue, however, contracted, primarily as a result of revaluation of the choices on minority pursuits.
The previous 12 months was above all one through which we returned to a optimistic money era, the primary after a few years.

In 2023, our sustainability technique additionally reached one other accomplishment via the presentation of our medium-term aims, an official dedication additionally for our scope 1, 2 and three greenhouse fuel discount targets, which we determined to validate with the Science Based mostly Goal initiative, receiving a optimistic response this February.

Commercial

We glance to 2024 with confidence, hoping that each our challenges and the alternatives arising from the continual development of our portfolio of residence manufacturers and core licenses will discover their place in a extra steady worldwide situation.”

2023 ECONOMIC AND FINANCIAL RESULTS 

NET SALES PERFORMANCE  

2023 closed for Safilo with internet gross sales of Euro 1,024.7 million, down 2.3% at fixed change charges and 4.8% at  present change charges in comparison with Euro 1,076.7 million recorded in 2022. 

Within the 12 months, natural2 gross sales, which symbolize probably the most vital indicator of the underlying enterprise efficiency,  recorded a deviation of -1.3%, additional approaching the extent of revenues recorded within the earlier 12 months, regardless of the  headwinds represented by the persevering with weak point of the North American market, and the over 60% drop in revenues  recorded within the former GrandVision chains. Internet of the latter impact, the Group’s natural2 efficiency was up 1.7%,  due to the nice efficiency of residence manufacturers, specifically Carrera and Polaroid, which grew effectively for the second  consecutive 12 months, and Blenders, again to development after the post-pandemic gross sales normalization in on-line channels. 2023  additionally continued to focus on Smith’s glorious growth within the direct-to-consumer (DTC) channel, which allowed the  model to return to development within the second half of a 12 months which, for the sports activities sector, was influenced by a enterprise slowdown  in bodily shops. 

The above-described dynamics allowed Safilo to extend each the load of its residence manufacturers portfolio, which got here to  symbolize 44%4 of gross sales from 42% within the earlier 12 months, and that of the enterprise in on-line channels, which rose to 16%4 of income from 15% in 2022. 

Commercial

On the licensed manufacturers entrance, 2023 additional confirmed BOSS and Tommy Hilfiger’s collections as key factors of reference  within the eyewear panorama, whereas among the many most up-to-date partnerships, Carolina Herrera, which joined Safilo’s portfolio  in 2022, and David Beckham, a model launched for the very first time in eyewear in 2020 and already one of many Group’s  core manufacturers, stood out for his or her double-digit performances. 

FULL YEAR 2023 NET SALES PERFORMANCE BY GEOGRAPHY: 

Change at   Change at   present foreign exchange  fixed foreign exchange (Euro million) 2023 % 2022 % Reported Reported Natural2  Commercial North America 452.9 44.2 497.7 46.2 -9.0% -6.4% -3.7% Europe 411.8 40.2 424.9 39.5 -3.1% -0.6% -1.3% Asia Pacific 59.9 5.8 57.7 5.4 +3.9% +9.1% +9.6% Remainder of the world 100.1 9.8 96.4 8.9 +3.8% +3.9% +3.9%  Complete 1,024.7 100.0 1,076.7 100.0 -4.8% -2.3% -1.3%

 

Gross sales tendencies by geographical space have been characterised for Safilo by the aforementioned weak point of the North American  market, which, after a subdued 2022 closing and a prudent begin to the brand new 12 months by the normal eyewear channels,  highlighted the best difficulties through the second and third quarters. 

To endure probably the most have been, specifically, the modern phase, the place the Group’s providing is extra concentrated, and  the sunglass product class, because of a not beneficial summer season season. Through the 12 months, after the numerous development  through the pandemic years, Smith’s sports activities enterprise was as a substitute penalized by the continual destocking by bodily  shops, particularly of merchandise devoted to the bike phase. 

In the USA, 2023 noticed the expansion of DTC gross sales, each for Blenders, following the success of the unique  collaboration launched within the final quarter of the 12 months with the American soccer icon nicknamed “Coach Prime”, and  for Smith, which right this moment generates within the channel virtually 40% of its North American enterprise. In 2023, Safilo’s gross sales in North America amounted to Euro 452.9 million, down 6.4% at fixed change charges (-9.0%  at present change charges) in comparison with Euro 497.7 million recorded in 2022 (-3.7% at natural2 stage).

In Europe, Safilo virtually fully recovered the sharp decline in enterprise within the former GrandVision chains following  their integration in EssilorLuxottica’s community, thus closing the 12 months considerably steady in comparison with the robust development  gross sales of 2022. 

Within the 12 months, Europe’s natural2 efficiency, additionally excluding the GV impact, amounted to a development of roughly 7%,  reflecting the nice progress recorded by the principle markets of the world, specifically Italy and France, the place the Group  continued to strengthen its industrial partnerships via the event of its You&Safilo digital platform. The 12 months was additionally characterised by the superb development of Turkey, Hungary and Poland, markets through which Safilo has  invested lately via the creation of direct industrial operations.  

In 2023, Safilo’s gross sales in Europe stood at Euro 411.8 million, recording a efficiency of -0.6% at fixed change  charges and -3.1% at present change charges in comparison with Euro 424.9 million recorded in 2022 (-1.3% at natural2 stage).  

Within the 12 months, Asia Pacific and Remainder of the World’s rising markets grew to fifteen.6% of the Group’s whole turnover, from  the 14.3% within the earlier 12 months, due to the nice progress of the enterprise in each areas, according to the event  plans by geographical space envisaged within the Group’s medium-term aims.  

In 2023, Safilo’s gross sales in Asia Pacific reached Euro 59.9 million, up 9.1% at fixed change charges and three.9% at present  change charges, in comparison with Euro 57.7 million recorded in 2022, whereas within the Remainder of the World the 12 months closed at Euro  100.1 million, up 3.9% at fixed change charges and three.8% at present change charges, in comparison with Euro 96.4 million  recorded in 2022. 

Key drivers of the optimistic efficiency have been, specifically, BOSS, Ports and Polaroid in China and Hong Kong, and the robust growth of Smith in each Australia and Japan, whereas Carrera and Tommy Hilfiger have been the undisputed  drivers of the double-digit development recorded within the 12 months by India and the Center East. 

In This fall 2023, Safilo’s internet gross sales stood at Euro 239.6 million, marking one of the best efficiency at fixed change charges  of the 12 months, equal to a development of two.0% (-2.4% at present change charges), whereas the development, additionally internet of gross sales within the  former GrandVision chains, stood at +3.6%. 

This fall 2023 NET SALES PERFORMANCE BY GEOGRAPHY: 

(Euro million) This fall 2023 % This fall 2022 % Change at   Change at   present foreign exchange  fixed foreign exchange  North America 111.9 46.7 114.3 46.6 -2.2% +3.0% Europe 90.7 37.9 92.2 37.6 -1.7% +2.5% Asia Pacific 16.2 6.8 16.4 6.7 -0.9% +4.5% Remainder of the world 20.8 8.7 22.5 9.2 -7.5% -6.6%  Complete 239.6 100.0 245.4 100.0 -2.4% +2.0%

 

The fourth quarter was characterised by the improved tendencies of the North American market, the place gross sales stood at Euro  111.9 million, up 3.0% at fixed change charges (-2.2% at present change charges), primarily due to the afore talked about development of Blenders and Smith of their DTC channels. Within the conventional channels of unbiased opticians  and chains, the eyewear enterprise was extra steady than within the earlier quarters of the 12 months due to a neater comparability  base, whereas Smith’s gross sales in bodily sports activities outlets have been affected by a sluggish begin to the winter season. 

In Europe, This fall gross sales, equal to Euro 90.7 million, have been again to a optimistic efficiency, up 2.5% at fixed change  charges in comparison with the identical quarter of 2022 (-1.7% at present change charges), whereas the progress, internet of the enterprise in  the previous GrandVision chains, accelerated from +1% in Q3 to round +6% in This fall. 

On the rising markets entrance, in This fall the Group’s gross sales recorded progress once more in Asia and Pacific, reaching Euro 16.2 million and a development of 4.5% at fixed change charges (-0.9% at present change charges), whereas revenues within the Relaxation  of the World, equal to Euro 20.8 million, recorded a decline of 6.6% at fixed change charges (-7.5% at present 

change charges), solely because of a difficult comparability base for the Brazilian market. Alternatively, the principle  markets within the Center East continued to develop within the quarter. 

ECONOMIC PERFORMANCE 

All through all the 12 months, Safilo’s working efficiency was characterised by two very distinct dynamics. On one hand, the numerous enchancment, in all quarters, of the gross margin, an necessary consequence achieved due to  an efficient pricing coverage, a extra beneficial channel combine, the upper effectivity of some procurement actions and to  the decline of transport prices which had most impacted the Group in 2022. 

On the opposite, beneath gross margin, the working leverage continued to have a unfavorable influence, influenced by greater  personnel prices because of wage inflation, in addition to by the investments in advertising and IT and digital tasks, which  administration applied according to the medium-term Group Enterprise Plan, with the purpose of progressively  strengthening residence manufacturers and the corporate’s IT and digital infrastructure. 

Key Financial highlights – in Euro million 2023 % on   internet gross sales 2022 % on   internet gross sales % Change  Internet gross sales 1,024.7 1,076.7 -4.8% Efficiency at cFX -2.3% Natural2 efficiency at cFX -1.3%  Gross revenue 585.7 57.2% 597.4 55.5% -2.0% Adjusted3 Gross revenue 601.8 58.7% 597.6 55.5% +0.7%  EBITDA 62.9 6.1% 96.8 9.0% -35.1% Adjusted3 EBITDA 92.0 9.0% 101.2 9.4% -9.1%  Working consequence 7.7 0.7% 48.5 4.5% -84.2% Adjusted3 working consequence 49.6 4.8% 53.5 5.0% -7.4%  Group internet consequence (24.6) (2.4%) 54.2 5.0% -145.5% Adjusted3 Group internet consequence 14.0 1.4% 58.3 5.4% -76.0%

IFRS 16 influence on EBITDA 11.9 11.8  IFRS 16 influence on Working consequence 1.5 1.5  IFRS 16 influence on Internet consequence (0.2) (0.4)

IFRIC SaaS influence on EBITDA (11.7) (9.7)

 

In 2023, the Group’s working efficiency was considerably impacted by non-recurring prices primarily associated to the  disposal of the Longarone plant, and, within the fourth quarter, additionally to the termination of actions associated to current licensed  manufacturers and to a partial write-down of some intangible property associated to a earlier acquisition. The influence of such prices stood at Euro 16.0 million on the gross revenue stage, Euro 29.1 and 41.9 million on the EBITDA  and EBIT stage respectively. The adjusted outcomes exclude such non-recurring objects. 

In 2023:  

– the adjusted3 gross revenue equalled Euro 601.8 million, barely up, by 0.7% in comparison with 2022, whereas the adjusted3 gross margin improved by 320 foundation factors, from 55.5% to 58.7%; 

– promoting, basic and administrative bills elevated by 1.7%, with a major enhance of their incidence on  gross sales primarily because of greater personnel prices and to the advertising and IT investments; 

– the adjusted3 EBITDA equalled Euro 92.0 million and a margin on gross sales of 9.0%, down respectively 9.1% and 40 foundation factors in comparison with 2022; 

– the adjusted3 working consequence equalled Euro 49.6 million and a margin on gross sales of 4.8%, down respectively 7.4%  and 20 foundation factors in comparison with 2022;

– the Group’s adjusted3 internet consequence, equal to Euro 14.0 million, was down 76.0% in comparison with 2022, significantly affected  by the revaluation, already accounted for within the first half of the 12 months, of the legal responsibility for choices on the pursuits in  Blenders, in relation to the extension of the second and third tranche of the associated put and name choices. Within the 12 months,  the general influence of the valuations of the legal responsibility for choices on minority pursuits amounted to a lack of 7.9 million  euros, which in contrast with the revenue of 31.2 million euros recorded in 2022. 

Internet monetary costs additionally elevated through the 12 months, from Euro 15.5 million to Euro 19.2 million euros, primarily due  to the rise in rates of interest. 

Key Financial highlights – in Euro million This fall 2023 % on   internet gross sales This fall 2022 % on   internet gross sales % Change  Internet gross sales 239.6 245.4 -2.4% Efficiency at cFX +2.0%  Gross revenue 134.8 56.2% 139.1 56.7% -3.1% Adjusted3 Gross revenue 142.6 59.5% 139.2 56.7% +2.4%  EBITDA 4.9 2.0% 13.3 5.4% -63.3% Adjusted3 EBITDA 16.5 6.9% 15.9 6.5% +3.8%

IFRS 16 influence on EBITDA 3.1 3.2  IFRIC SaaS influence on EBITDA 2.4 4.2

In This fall 2023: 

– Safilo’s adjusted3 gross margin continued to enhance year-on-year, going from 56.7% to 59.5%, thanks above all to  a very beneficial channel combine, as a result of glorious progress within the quarter of the direct-to-consumer (DTC)  channel. The adjusted3 gross revenue amounted to Euro 142.6 million, up 2.4% in comparison with This fall 2022;  

– adjusted3 EBITDA was equal to Euro 16.5 million and a margin on gross sales of 6.9%, up respectively by 3.8% and 40  foundation factors in comparison with This fall 2022. 

FINANCIAL PERFORMANCE 

Due to a optimistic money era additionally within the fourth quarter, equal to Euro 13.3 million, Safilo closed 2023 with a  Free Money Movement of Euro 29.1 million in comparison with the money absorption of Euro 16, 5 million recorded in 2022.  Within the 12 months, the money circulation from working actions grew to Euro 47.7 million, due to a money era of Euro 21.5 million on the working capital stage. The latter, specifically, benefitted from the lower in stock and the nice  money assortment, which was in flip supported by the superb efficiency of the direct-to-consumer (DTC) enterprise in  the fourth quarter.  

In 2023, the money circulation for funding actions was characterised, on the one hand, by a capital expenditure of Euro  13.3 million, whereas, on the opposite, by the gross sales consideration for the disposal of the Longarone plant, equal to round  Euro 11 million, which partially counterbalanced the entire cash-out, of round Euro 16 million, linked to the deal 

(primarily accounted for within the money circulation from working actions earlier than the change in working capital). 2023 Free Money Movement included the cost of Euro 5.9 million made within the third quarter to train the primary possibility on  a further 10% of Blenders non-controlling pursuits. Earlier than this acquisition, Free Money Movement for the 12 months amounted  to Euro 35.1 million.  

Free Money Movement – in Euro million 2023 2022  Money Movement from working actions earlier than change in working capital 26.2 71.5 Change in working capital 21.5 (62.4)  Money Movement from working actions 47.7 9.2 Money Movement from funding/disinvestment actions (2.7) (15.7)  Money funds for the principal portion of lease liabilities IFRS 16 (10.0) (10.0) Free Money Movement pre-acquisitions 35.1 (16.5) Money Movement for the acquisition of minority pursuits (5.9) – Free Money Movement 29.1 (16.5)

 

As at December 31, 2023, the Group’s internet debt decreased to Euro 82.7 million (Euro 43.7 million pre-IFRS 16,  comparable to a monetary leverage, additionally pre-IFRIC SaaS, of 0.48x), from Euro 113.4 million (Euro 69.6 million pre IFRS 16) recorded on the finish of December 2022. The important thing parts of the Group’s internet debt on the finish of December  2023 are the next: 

– a long-term debt place of Euro 117.7 million, fabricated from financial institution loans for Euro 88.3 million, associated to the Credit score  Facility signed in September 2022, and an IFRS-16 impact for Euro 29.4 million; 

– a short-term debt place of Euro 39.9 million, fabricated from financial institution loans for Euro 30.3 million, associated to the Credit score  Facility, and an IFRS-16 impact for Euro 9.6 million; 

– a money place of Euro 74.9 million.